Climate finance

Climate change is already hurting our planet and its people. Flooding, drought, more intense storms, decreased food production, increasing water scarcity, and greater vulnerability to disease are causing heightened suffering around the world. Although wealthy countries like the United States are responsible for creating the climate crisis, the world’s poorest people are disproportionately affected.

The world cannot afford for developing countries to go down the dirty development path that already-industrialized-countries followed over the last few centuries -- a path that has landed us in the throes of global warming. Developing countries need hundreds of billions of dollars every year to deal with climate change, and more if rich countries don’t start to take their obligations to reduce greenhouse gas emissions seriously. For example, the United Nations Department of Economic and Social Affairs’ 2009 UN World Economic and Social Survey estimated that $500-$600 billion annually is needed for adaptation (adjusting to the unavoidable impacts of climate change) and mitigation (reducing climate pollution) in developing countries. Though cost estimates vary, the bottom line is the less we do now, the more we will pay later.

A matter of fairness

In keeping with the principle that polluters are responsible for cleaning up the mess they create (i.e. “the polluter pays principle”), developed countries responsible for the climate crisis -- top among them the United States -- must use public funds to help enable developing countries to address climate change. Friends of the Earth U.S. seeks to facilitate the transfer of funds from industrialized countries, like the United States, to developing countries to adapt to the unavoidable impacts of climate change, reduce greenhouse gas emissions, and grow ecologically sustainable economies. In the context of the United Nations Framework Convention on Climate Change, this funding is known as “international climate finance,” and is a legal obligation of signatory countries like the United States.

Sources of climate finance

International climate finance must come from public sources. A promising source of revenue is a financial transaction tax. Hundreds of billions of dollars could be raised per year by a “Robin Hood” tax -- a tiny tax on harmful speculation in the financial sector. Similarly, closing offshore tax havens and cracking down on corporate tax dodgers could provide hundreds of billions in revenue for climate finance and other public goods.

Friends of the Earth is working to ensure that climate finance is not dominated by the whims and demands of financial markets and investors. For example, adaptation projects such as public health programs may be critical to protecting those most at risk from a spike in climate-related diseases. However, such initiatives are unlikely to turn a profit for the private sector.

The Green Climate Fund

A Green Climate Fund was recently established by the UNFCCC as the main international channel through which climate finance should flow. The GCF is now in the process of being designed. Not only is Friends of the Earth campaigning to make sure that the U.S. contributes its fair share of climate finance, we are also working hard to ensure that the GCF is as equitable, climate friendly, and effective as possible in meeting the needs of peoples in developing countries. We especially want to make sure the GCF does not become an institution dominated by multinational corporations and Wall Street investors that would leave critical, yet unprofitable, priorities by the wayside.